Expansion?

[cowman]

Silverback:Everyone of us, no matter what business we are in, has an obligation to take care of our assetts for ourselves, our spouses, our families? We don't owe the guy down the street anything?
I will note however quite often the landlord farmer will rent his land to a longtime neighbor, rather than the big operator in the area? I rent my grainland to my cousin, might be able to squeeze a few extra dollars out of someone else, but we have a good relationship with a shared past and I know the quality and honesty of the man! He could no more cheat me than he could himself!
So many farmers have set themselves up to a situation where it is impossible to pass on the farm? Why is that? I would suggest they didn't have their priorities in place for a successful transfer? Add to that the fact that farming is such a dog of a business that it can't generate the neccessary income to retire decently while passing on the farm to the next generation.
I can't see that changing?
Randy is absolutely right when he says it is almost impossible to buy the land,machinery, livestock to run a successful farm? You either inherit it, marry it, or have another source of income?
The fact is without a drastic improvement in the cost/price squeeze, land in Alberta will never pay for itself? I don't know what the average price of land is in the corrider but it is very high around Red Deer? In that $2500 to $3500 range! How do you pay for that with just about any agricultural output?
Now grassfarmer would argue that in reality the appreciation of the value of the land would justify owning it and that is true...when you sell it! However it is very hard to eat appreciation and keep the wolf from the door on "paper" assetts?
There is no real solution here.

[cowman]

silverback, I don't really think it is up to a retiring farmer to put less dollars in his pocket. Many older farmers rely on their rental income combined with their pension to have enough to enjoy a few healthy years before they can't travel or do any of the other things that they couldn't take time to, or afford to do in their years of working their backside off on the farm.

I know many such farmers and they are going to leave a lot to their kids when their land is liquidated but as long as they either want to remain living on the farm and renting it out or moving off the farm and doing the same, they likely haven't amassed the fortune that would allow them to be somebody's benefactor.

[cowman]

just want to add that I don't think you need to apologize to anyone silverback. If any of us can dish it out we should be able to take it in return !!!!!

[silverback]

I fully realize that nobody needs to sacrifice their retirement or their families future when they are retiring or renting out the farm. All I am saying is that it seems that the decision ends up going down to the last penny. Nobody seems to stop and think if they can do without that last dollar or two per acre when it could mean helping out a younger neighbor. I guess I would like to think that being a good steward and a decent neighbor should mean something, maybe just wishful thinking in these times.

[cswilson]

Most oldtimers want to make their money twice-want you to pay cash so they don't have to pay tax etc. Got a group of them going one morning at the coffeeshop said they should double family allowance and cut pensions back lol. I guess most of them are a bit greedy because they had alot of lean years on the way up-but like I said most aren't too keen on giving anyone a break-I know of several thousand tons of hay rotting in the stack up here because the old boys want drought prices still for it.

[cswilson]

cwilson, and they are the loser aren't they ? Better a buck in the hand than ten in the stack of bales !! There are farmers like that around this area as well, but the way I see it is that its a free market. Supply and demand will dictate whether they can gauge people for their hay or land rent.
I have to compare the land rent issue to what the oil companies deal with when they negotiate right of entry.
I always found it comical that the farmer that was holding out for more rent from the oil company was the same one that came to the County's Assessment Review Board asking to have his taxes lowered because his land was not productive farmland !!! Mind you when he rented it to the neighbour it was first class land and not a weed on it !!!!

I don't really think that a lot of older farmers are rolling in dough, most of them have never lived too high on the hog and still are of a mindset that they need to put some aside for a rainy day even when they are 80 !!!

[cowman]

I often wonder how any industry can get a fair price for their product if they don't limit supply? If there is an over supply how do you get a price that reflects a profit? Sometimes supply has to be eliminated to meet demand?
When Ford over produces trucks do they give them away or cut back on production? Isn't that what we should be doing with grain and cattle or for that matter hay?
If a cow goes through the ring and sells for $50 is that acceptable? Well I guess you have $50 in your pocket and the butcher has $2000 in his, so why would he pay anymore? However if you took that cow out and treated the local coyotes to a feast, maybe next week the butcher might be willing to pay a bit more?
Of course this is on a very small scale but what if every farmer did the same thing? When the meat counter was bare(and the coyotes were fat and sassy) do you think the price of cattle might go up? Providing you could limit the government from flooding in cheap meat to destabilize the market?
Every other industry practices supply control except the ag industry. The concept of marketing boards were a good one except the farmers were dumb enough to let the government control it! As well as let quota become a commodity.
Think about it...if it was determined that the Canadian consumer demanded a certain amount of beef per week, then the industry would produce that much meat. Any excess would go to keep the coyotes happy! The price would be set so the farmer made a decent sustainable profit. If the consumer decided the price was too high and cut back...then I guess the coyotes would get a little more! Not much sense producing a product if you can't get a profit out of it? That is the road to the poor house?

[cowman]

All you need to do is look at the dairy industry to support what you are saying cowman. It is obvious that anyone intending on staying in the cattle business is gearing up to expand their herd and landbase. In this area the larger operations are getting larger, while a lot of the 200 cow operations are getting out of the business. Smaller herds are not viable given the cost of production and even a very modest living for the operator, but manpower to run a larger operation is going to be a problem given the opportunities in the oil industry .
I don't know what some of the folks that sell their herds are going to do, many of them don't have sufficient landbase to live on rental income, and their return on selling their herds isn't going to keep them going for many years particularly if they owe the banker anything.
Some of the folks that got out of the business a few years ago have been making a decent living selling hay but this year that income is going to be less given the amount of hay for sale in the provnce, and of course the rain has resulted in lower quality feed in many areas.

[cowman]

Well emerald you know what they say "The bigger you are the harder you fall!" I would say anyone gearing up to buy more land and cows is sure a gambler? I doubt the profits will ever pay for it.
But there are always optomists who are willing to risk their money...or more likely the old mans money LOL!
Personally I don't think anyone should be expanding if this includes debt? The business just can't justify a heavy debt load.
I guess if the guys selling hay realize they aren't making any money they will consider doing something else? Maybe sell it to the "expander" for a big price? Then while they are sitting on the patio sipping a Pina Colada they can sit and watch the go-getter slaving away for the bank and keeping the government in beans!

[rkaiser]

I know how to limit supply cowman. Every farmer in Canada, and the world, for that matter could quit using fertilizer for 1 year, and then MAYBE limit the fertilizer you are allowed to buy after that.

Grain supplies would be down, feed supplies would be down, prices would rise, and cow guys would downsize. All the same things would happen, that would happen if we were to move toward supply management except that it would be fair for everyone. Except of course the guys/gals who have already weaned themselves of the "drug" that shows you are the best farmer in the land.LOL